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- BP Ventures completes the ISO 20022 standard on the Stellar Lumen blockchain.
- Financial institutions would have the opportunity to upgrade their infrastructures.
Blockchain consulting and services firm, BP Ventures has announced the completion of ISO 20022 on the Stellar Blockchain. ISO 20022 is meant to standardize data transfers between financial institutions across the globe for different kinds of electronic payments.
In addition to payment settlements, the standard is used to settle stocks and other securities. Real-time clearing systems including SWIFT, SEPA in Europe, Faster Payments in the UK, etc are already using the standard. The standardization of transfer and compliance protocols enables a company to cut costs and reduce risk. SWIFT started its implementation in March 2023.
Founder of BPV, Anthony Barker commented on this initiative:
We believe that we have implemented the most robust mapping of ISO 20022 XML to date. This will allow banks and financial institutions everywhere to benefit from Stellar’s blockchain technology, the stablecoin Circle USDC, and remain compliant with ISO standards.
Over the years, BPV has helped financial institutions improve efficiency, security, and market reach. This is through the integration of blockchain digital asset management solutions into their workflow.
The ISO 20022 support was developed for Stellar’s standardized KYC rails. According to the announcement, its implementation was through the Stellar Ecosystem Proposals (SEP) 9 and 31. The benefits of Stellar including the 5 seconds settlement, low fees, and immediate finality would be taken advantage of by payments and other asset transfers. While this is done, transactions would be processed at the same time based on the new ISO 20022 standard.
Some merits and challenges of the ISO 20022 standard
The development would enable trillions of dollars worth of financial sector transfers to move to the Stellar network. According to Barker, the implementation would give financial institutions the chance to upgrade their infrastructure.
The whole financial sector will need to restructure its workflows to reflect ISO 20022 compliance. This new integration on the Stellar network makes it possible to improve operational efficiency while achieving compliance with the new standard at the same time.
According to the ISO organization, ISO 20022 would become the universal standard for high or large-value payment systems of all reserve currencies by 2025. This is already being used by payment systems in over 70 countries. Data estimates that ISO 20022 supports 80 percent of transaction volume and 87 percent of transaction value globally.
It, however, has a challenge of data accuracy put into proper message transfer. Every character expected to be entered into the financial message should be foolproof and error-free to be in line with the specifications of the standard. This may be validated at both ends of the communication chain. The slightest error leads to rejection and delay of the lasting days. Another concern is that all data is entered manually, meaning, there are possibilities of human errors.
While the ISO 20022 standard will have no impact on the digital asset market and would not affect any available crypto, banks and financial institutions would be the sole beneficiaries of these implementations. Ripple has also announced that it has joined the ISO 20022 standards body and is working to establish a new data standard for payments between financial institutions.
